‘Big boys play by different rules’, anti-bribery probe hears

Lawyers have told a House of Lords committee there is a ‘sense of unfairness’ in anti-bribery procedures that result in big corporate entities appearing less likely to face criminal prosecution than small and medium-sized enterprises.

The committee discussed the case R v Skansen Interiors in which interior design company Skansen was convicted of bribery offences despite having self-reported and fired the wrongdoers.

Eoin O’Shea, partner at Reed Smith, said the case represented an example of an individual and company that attempted to do the right thing but found itself subject to criminal proceedings.

Referring to the case, Conservative peer Lord Hodgson of Astley Abbotts said most convictions appeared to involve ‘small’ companies and that the ‘big boys are able to play to a completely different set of rules.’

‘It’s potentially very unsatisfactory that every now then a small person will be hung in front of everyone while the big boys pay a bit of money and off they go,’ Lord Hodgson said.

Rodney Warren, partner at London firm Warren’s Law and Advocacy, said there is a ‘sense of unfairness’ within smaller organisations because it is easier to point to the ‘controlling mind’ to identify wrong-doing.

Under the 2010 act, corporate liability occurs when the offence is committed by a natural person who is the ‘directing or controlling mind or will of the organisation’ – known as the identification principle.

Warren said: ‘Larger companies tend to have more tiers of management and responsibility. The sense I get is that smaller companies do feel more vulnerable because they can see that bigger organisations have different processes that are not open to them.’

O’Shea said that there might be 30 people who are potential ‘decision makers’ in a large company, making it more difficult to identify who is ultimately responsible. O’Shea, who is also chair of the corporate crime and corruption committee at the City of London Law Society, said the identification principle is a ‘hugely difficult’ topic about which views differ.

‘There’s a narrative that big companies are aware of the principle and organise their affairs to insulate senior managers from decision making and therefore insulate the company from criminal liability. In my experience that seems wrong, well run business do not spend much time thinking about very obscure points of law and organising their affairs accordingly,’ he said.

Louise Hodges, partner at Kingsley Napley, said companies who had been through the Deferred Prosecution Agreement route, mainly larger companies, would not ‘treat it as though they were being let off.’

O’Shea added the US model of a ‘declination’, currently being piloted by the Department of Justice (DoJ) may be worth considering in England and Wales.

Under that system, if a company self-reports in sufficient time, a prosecution will not be pursued. A company would instead disgorge its profits made from the illegal activity. ‘The idea is that authorities only know about the situation because a company has blown the whistle on itself,’ O’Shea said.

The House of Lords committee was established earlier this year in order to consider and report on the effectiveness of the 2010 act.

Compare in football. Luton Town blew the whistle on bungs in the game and were deducted 30 points. Chelsea are owned by a man who admitted in Court his multi-billions came from rigged auctions and literally nobody has done the slightest thing about that.

Did anyone else feel almost stunned into silence reading this headline, and almost struggle to make it through the content? Not a comment on the quality of reporting, it’s about the content.

There is a pyramid analogy that I like, about being at the top means you can only clearly see what is next to you and immediately below, and everything else you have some awareness of but nothing else. Being a cynic, and understanding how govt would find it easier if all the country’s legal professionals worked across 50 big companies instead of hundreds of smaller firms, it feels like the treatments of small firms is to achieve exactly that – eliminate the little guy.

And it isn’t just law, it’s accountants, brokers, manufacturers etc. It isn’t so much promoting big business as much as it is punishing or taking punitive actions against small business.

If this genuinely is the first the HOL is aware, I despair more than ever. And successive govts have, for the last 40 years or so, taken the approach of “dealing” with things they don’t like by either banning or taxing them out of existence – I give it a year until we know which it will be for smaller law firms.

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